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Alaska Air (ALK) Lags on Q3 Earnings & Revenues, Updates View
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Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2023 earnings per share (EPS) of $1.83, which missed the Zacks Consensus Estimate of $1.88 and declined 28% year over year.
Operating revenues of $2,839 million missed the Zacks Consensus Estimate of $2,876.1 million. The top line jumped 0.4% year over year, with passenger revenues accounting for 92.2% of the top line and increasing 0.1% owing to continued recovery in air-travel demand.
Passenger revenues totaled $2,618 million in the reported quarter. On a year-over-year basis, cargo and other revenues of $62 million fell 7% year over year. Mileage plan other revenues grew 9% to $159 million.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Total revenue per available seat mile (a key measure of unit revenues) fell 12% year over year to 15.28 cents. Yield decreased 10% to 16.66 cents.
Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose 11% to 15.71 billion. To cater to this increased demand, capacity (measured in average seat miles) expanded 14% to 18.58 billion. Consolidated load factor (percentage of seats filled by passengers) decreased 1.9 percentage points to 84.6% in the third quarter of 2023.
In the third quarter, total operating expenses (on a reported basis) declined 5% year over year to $2,628 million.
Economic fuel price per gallon fell 11% to $3.26. Consolidated operating costs per available seat mile (excluding fuel and special items) fell 5% year over year to 9.57 cents.
Liquidity
As of Sep 30, 2023, Alaska Air had $2,451 million of cash and marketable securities compared with $2,442 million at the end of June 2023.
ALK exited the third quarter of 2023 with long-term debt (net of current portion) of $2,128 million compared with $1,889 million at June 2023-end. Debt-to-capitalization ratio was 48%, flat sequentially.
ALK generated $271 million in cash from operating activities in the third quarter. During the third quarter of 2023, ALK repurchased 248,988 shares for almost $13 million.
Outlook
For the fourth quarter of 2023, Alaska Air expects capacity to improve 11-14% from the year-ago reported figure. Cost per available seat mile, excluding fuel and special items, is expected to decline 3-5% year over year. Total revenues are anticipated to grow 1-4% year over year. ALK forecasts the economic fuel cost per gallon in the $3.30-$3.40 band. Adjusted pre-tax margin is anticipated to be between 0% and 2%.
For 2023, ALK continues to expect EPS between $4.25 and $4.75 (prior view: $5.50 to $7.50). The Zacks Consensus Estimate of $5.29 lies above the updated guidance.
The adjusted pre-tax margin is anticipated to be between 7% and 8% (prior view: up 9-12%), and the full-year tax rate is still expected to be around 25%.
For 2023, Alaska Air now expects capacity to improve 12-13% (prior view: up 11-13%) from the year-ago reported figure. Cost per available seat mile, excluding fuel and special items, is now expected to decline 1-2% (prior view: down 1-3%) year over year. Total revenues are now anticipated to grow 7-8% (prior view: up 8-10%) year over year.
Capital expenditures are now expected to be around $1.7 billion (prior view: around $1.8 billion).
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from non-recurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.
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Alaska Air (ALK) Lags on Q3 Earnings & Revenues, Updates View
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2023 earnings per share (EPS) of $1.83, which missed the Zacks Consensus Estimate of $1.88 and declined 28% year over year.
Operating revenues of $2,839 million missed the Zacks Consensus Estimate of $2,876.1 million. The top line jumped 0.4% year over year, with passenger revenues accounting for 92.2% of the top line and increasing 0.1% owing to continued recovery in air-travel demand.
Passenger revenues totaled $2,618 million in the reported quarter. On a year-over-year basis, cargo and other revenues of $62 million fell 7% year over year. Mileage plan other revenues grew 9% to $159 million.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Alaska Air Group, Inc. price-consensus-eps-surprise-chart | Alaska Air Group, Inc. Quote
Total revenue per available seat mile (a key measure of unit revenues) fell 12% year over year to 15.28 cents. Yield decreased 10% to 16.66 cents.
Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose 11% to 15.71 billion. To cater to this increased demand, capacity (measured in average seat miles) expanded 14% to 18.58 billion. Consolidated load factor (percentage of seats filled by passengers) decreased 1.9 percentage points to 84.6% in the third quarter of 2023.
In the third quarter, total operating expenses (on a reported basis) declined 5% year over year to $2,628 million.
Economic fuel price per gallon fell 11% to $3.26. Consolidated operating costs per available seat mile (excluding fuel and special items) fell 5% year over year to 9.57 cents.
Liquidity
As of Sep 30, 2023, Alaska Air had $2,451 million of cash and marketable securities compared with $2,442 million at the end of June 2023.
ALK exited the third quarter of 2023 with long-term debt (net of current portion) of $2,128 million compared with $1,889 million at June 2023-end. Debt-to-capitalization ratio was 48%, flat sequentially.
ALK generated $271 million in cash from operating activities in the third quarter. During the third quarter of 2023, ALK repurchased 248,988 shares for almost $13 million.
Outlook
For the fourth quarter of 2023, Alaska Air expects capacity to improve 11-14% from the year-ago reported figure. Cost per available seat mile, excluding fuel and special items, is expected to decline 3-5% year over year. Total revenues are anticipated to grow 1-4% year over year. ALK forecasts the economic fuel cost per gallon in the $3.30-$3.40 band. Adjusted pre-tax margin is anticipated to be between 0% and 2%.
For 2023, ALK continues to expect EPS between $4.25 and $4.75 (prior view: $5.50 to $7.50). The Zacks Consensus Estimate of $5.29 lies above the updated guidance.
The adjusted pre-tax margin is anticipated to be between 7% and 8% (prior view: up 9-12%), and the full-year tax rate is still expected to be around 25%.
For 2023, Alaska Air now expects capacity to improve 12-13% (prior view: up 11-13%) from the year-ago reported figure. Cost per available seat mile, excluding fuel and special items, is now expected to decline 1-2% (prior view: down 1-3%) year over year. Total revenues are now anticipated to grow 7-8% (prior view: up 8-10%) year over year.
Capital expenditures are now expected to be around $1.7 billion (prior view: around $1.8 billion).
Currently, Alaska Air carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from non-recurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.